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6 May 2016
Fed may opt to tighten the monetary policy sooner - Rabobank
Piotr Matys, EM FX Strategist at Rabobank, suggests that at the current juncture market participants have to assess the odds that the Fed may raise interest rates in June.
Key Quotes
“St. Louis Fed President James Bullard, San Francisco’s John Williams, Dallas’ Robert Kaplan of Dallas and Atlanta’s Dennis Lockhart all signaled that a hike next month cannot be excluded, although they also emphasized that the final decision will depend on data.
The market remains unconvinced as reflected in the Fed fund futures, which indicate only 10% chance of a move in June. At this stage Rabobank’s Fed watcher Philip Marey still maintains his view that the Fed may opt to tighten the monetary policy sooner than the market currently anticipates, although his June call is not carved in stone as he wants to see more signs of improvement in economic activity in Q2 after sluggish Q1.
In the FX sphere, hawkish remarks from Fed officials and global risk aversion provided the US dollar with a boost. After extending its losses at the beginning of the week to a new year-to-date low of 91.919, the DXY index produced an impressive rebound to 93.83.”
Key Quotes
“St. Louis Fed President James Bullard, San Francisco’s John Williams, Dallas’ Robert Kaplan of Dallas and Atlanta’s Dennis Lockhart all signaled that a hike next month cannot be excluded, although they also emphasized that the final decision will depend on data.
The market remains unconvinced as reflected in the Fed fund futures, which indicate only 10% chance of a move in June. At this stage Rabobank’s Fed watcher Philip Marey still maintains his view that the Fed may opt to tighten the monetary policy sooner than the market currently anticipates, although his June call is not carved in stone as he wants to see more signs of improvement in economic activity in Q2 after sluggish Q1.
In the FX sphere, hawkish remarks from Fed officials and global risk aversion provided the US dollar with a boost. After extending its losses at the beginning of the week to a new year-to-date low of 91.919, the DXY index produced an impressive rebound to 93.83.”